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Previous: SECURITY BENEFIT LIFE INSURANCE CO, 24F-2NT, 1998-03-24 |
Next: SERVICE CORPORATION INTERNATIONAL, 8-K, 1998-03-24 |
<PAGE> 1
Dear Contract Owner:
Domestic stocks registered positive returns through the six months ended January
31, 1998, recovering from sharp declines in the Fall following turbulence in
Asian markets. Treasury bond prices were particularly strong, benefiting from a
flight to the safety of U.S. government-backed securities. The economy continued
its nearly ideal pattern of low unemployment, moderate growth, and subdued
inflation. I encourage you to review the following report covering the past six
months and to contact us if you have any questions.
Respectfully submitted,
/s/ RICHARD C. PEARSON
----------------------------------------
Richard C. Pearson
President
[LOGO]
<PAGE> 2
SECURITY FIRST TRUST:
T. ROWE PRICE GROWTH AND
INCOME SERIES AND VIRTUS
EQUITY SERIES
EQUITY MARKET OVERVIEW
The equity market recovered in late-January from steep declines in the
final months of 1997 and the early weeks of 1998. Good corporate earnings
results, continued low inflation, and a supportive interest rate environment
provided ample fuel for the advance. The recent performance of stocks was
particularly impressive in light of the market's October jitters and concern
over the volatility of the Asian markets.
Equity returns for 1997 were notably impressive coming on the heels of
considerable market strength in 1995 and 1996. The 1995-1997 period, in fact, is
the first time in modern history that stock market returns have exceeded 20% in
three consecutive years.
EQUITY MARKET OUTLOOK
The investment environment has been exceptionally conducive to good stock
market returns. As prices have advanced, the market's valuation appeal and
likely near-term upside potential have diminished. We question how long the
"delinkage" between the underlying rate of corporate earnings and dividend
growth on one hand, and the more rapid advance of security prices on the other,
can continue. Recent volatility is a reminder that investing entrails risks that
sometimes get in the way of positive returns.
While our emphasis is solely on uncovering interesting investment values,
we believe it is prudent to have more modest expectations for equity market
performance in the year ahead.
PORTFOLIO MANAGEMENT: T. ROWE PRICE GROWTH AND INCOME SERIES
Departing from the pattern of the six months ended July 31, 1997, returns
for the past six months moderated considerably, largely due to the crisis in
Asia. In fact the total return posted for the six month period ending January
31, 1998 was 2.28%. Stocks lost ground from their 1997 highs, then advanced
briskly following some shakiness at the beginning of January. Conservative funds
such as this are designed to cushion downside risk during periods of increased
volatility.
GROWTH AND INCOME SERIES
SECTOR DIVERSIFICATION
<TABLE>
<S> <C>
Capital Equipment 4.3%
Consumer Non-Durables 23.3%
Consumer Cyclicals 0.8%
Consumer Services 11.2%
Transportation 5.9%
Energy 7.6%
Financial 15.6%
Process Industries 8.7%
Technology 2.5%
Utilities 6.8%
Short-Term Securities 13.3%
</TABLE>
In this volatile environment, we tried to tune out as much short-term
noise as possible by doing what we have always done: identify reasonably valued
investment opportunities with attractive yields and price/earnings ratios, good
upside potential, and limited downside risk.
No example demonstrates the fickle nature of investor behavior better than
AT&T, one of our major holdings. The price of AT&T's stock had languished for
several years. The company's problems were analyzed in the media almost daily.
Few Wall Street brokerage firms found anything positive to say about the firm or
its shares, which in our opinion represented an attractive investment
opportunity. Today new management is in place, investor sentiment has turned
positive, and the stock price has rebounded strongly. We are naturally attracted
to situations fraught with controversy like this one. As long as investor
psychology ebbs and flows, there will be ample opportunities to uncover
promising investment opportunities.
1
<PAGE> 3
GROWTH & INCOME SERIES
15 LARGEST HOLDINGS
<TABLE>
<CAPTION>
Percentage of
Security Portfolio
-------- -------------
<S> <C>
Travelers Group Inc. 2.3
American Express Co. 1.8
General Electric 1.6
Smith-Kline Beecham PLC ADR 1.6
AT&T Co. 1.6
Dayton Hudson Corp. 1.4
First Data Corp. 1.3
Mellon Bank Corp. 1.3
Allied Signal, Inc. 1.2
Schering-Plough Corp. 1.2
American Home Products 1.2
United States Surgical Corp. 1.2
Norfolk Southern Corp. 1.2
Hilton Hotels Corp. 1.2
Abbott Laboratories 1.2
----
TOTAL 21.3
====
</TABLE>
PORTFOLIO MANAGEMENT:
VIRTUS EQUITY SERIES
During the past six months, the performance of your portfolio moderated
considerably. Total return for the Virtus Equity Series for the six months ended
January 31, 1998 was 2.57%. The lower performance for this period as compared to
the prior period was mostly due to the crisis in Asia. The significance of the
events in the Far East are still to be determined. The most visible near-term
impact will be on those companies competing with, lending to, or exporting to
the region. The fund continues to emphasize value stocks over growth stocks.
Value stocks are those companies selling at low price relative to actual value
of their underlying assets. Growth stocks are those companies with above-average
earnings expectations.
EQUITY SERIES
SECTOR DIVERSIFICATION
<TABLE>
<S> <C>
Consumer Non-Durables 19.7%
Technology 10.4%
Transportation 5.5%
Consumer Cyclicals 2.2%
Financial 21.2%
Capital Equipment 8.1%
Consumer Services 8.5%
Energy 8.1%
Process Industries 4.7%
Utilities 11.6%
</TABLE>
The fund's investment strategy continues to be structured in a capital
preservation position. We believe value stocks will provide defensiveness due to
their higher yields, lower price-earnings ratios and lower volatility. The
Virtus Equity Series is structured to outperform in a difficult equity market
environment.
EQUITY SERIES
15 LARGEST HOLDINGS
<TABLE>
<CAPTION>
Percentage of
Security Portfolio
-------- -------------
<S> <C>
General Electric Co. 2.6
Exxon Corp. 2.4
AT&T Co. 2.2
Royal Dutch Petroleum Co. ADR 2.1
Unilever NV New York Share 2.0
Coca Cola 1.9
IBM Corp. 1.9
Bell Atlantic Corp. 1.8
Intel Corp. 1.7
Lilly Eli & Co. 1.6
Bristol Myers Squibb Co. 1.6
Walt Disney Co. 1.6
Proctor & Gamble Co. 1.6
Pfizer Inc. 1.5
Fleet Financial Group 1.5
----
TOTAL 28.0
====
</TABLE>
2
<PAGE> 4
SECURITY FIRST TRUST:
BOND SERIES AND VIRTUS U.S. GOVERNMENT INCOME SERIES
FIXED-INCOME MARKET OVERVIEW
There were great expectations for a rewarding fixed income market over the
six months ended January 31, 1998. A powerful bull market drove rates below 6%
across the yield curve and pleasantly exceeded expectations. A friendly Federal
Reserve, combined with powerful inflation data, propelled rates to four-year
lows. Further, an embarrassment of riches on the fiscal front found the Federal
Government's budget in the best shape in a generation, leading to the
expectation of a virtually balanced budget in 1998. This fiscal prosperity
caused a sharp reduction in Treasury issuance, placing further upward pressure
on outstanding issues.
Regarding sector performance, there were challenges during this six month
period for the investment grade corporate market. Yield spreads widened
modestly resulting in some under-performance versus Treasuries. The high yield
market delivered an outstanding return of 12.76% as investors were once again
paid to take credit risk. The major story of 1997 was the turmoil in Asia which
was touched off by weakness in the Thai Bhat in July and culminated with the
liquidity crisis in Korea at year end. Mortgage-backed securities continued
their impressive performance in the fourth quarter despite a difficult quarter
for most spread products and, as a result, mortgage backed's had their best year
in the last six versus Treasuries.
FIXED-INCOME MARKET OUTLOOK
We enter 1998 impressed by the positive environment, but sobered by the
strong returns registered in 1997 and the overall level of interest rates. While
the fundamentals appear to be positive, the current market offers little room
for error, and every day brings evidence of the sharp adverse investor reaction
to any disappointment. Thus we will continue to seek out value scrutinizing
carefully sectors and securities shunned by our peers. We will approach the
markets with skepticism that has been proven to be prudent. Thus, in a year that
we look for bonds to perform well, we continue to manage assets in the same
style that has served us well.
PORTFOLIO MANAGEMENT:
BOND SERIES
We restructured the portfolio during the six months ended January 31, 1998
and actively managed the portfolio during the past six months. Our strategy is
characterized by active sector rotation and security selection, duration
management, and quantitative analysis that helps us manage the option affect and
the shape of the yield curve. We have established an overweighted position in
the corporate sector. This sector has two components, core investment grade
issues and tactical high yield. Our current commitment of 39% consists slightly
less than 28% in the core and the balance of 11% in the tactical sector. We have
also been more active in the mortgage-backed sector. We initially overweighted
this sector with a 34% commitment. As interest rates fell throughout the latter
half of the year, we both reduced and shifted the structure of this sector.
Prepayment risk is clearly an issue in the current interest rate environment,
and for this reason we reduced our commitment to less than 30% of the portfolio.
BOND SERIES
SECTOR DIVERSIFICATION
<TABLE>
<S> <C>
Short-Term Securities 6.3%
Corporate Bonds 39.0%
Federal Agencies 28.0%
U.S. Government Obligations 26.7%
</TABLE>
3
<PAGE> 5
As interest rates fell in the second half of the year, we increased the
portfolio duration to five years or greater and maintained a relatively long
duration throughout the second half of 1997. Starting in mid-December we reduced
the duration to slightly long, as a powerful rally seemed to run out of steam.
The market has seesawed back and forth in a relatively narrow range since early
January, and we look for signs of the next trend.
The strategy that we have outlined allowed the portfolio, before fees, to
exceed the benchmark by a comfortable margin. Our sector strategy and our
duration management were both powerful contributors to competitive results in
that the total return for the Fund for the six months ended January 31, 1998 was
4.97%.
PORTFOLIO MANAGEMENT:
VIRTUS U.S. GOVERNMENT
INCOME SERIES
As we stated earlier, the biggest story in the financial markets over the
past six months was the financial turmoil in Asia. The Asia problems caused a
sharp increase in volatility and a flight to quality that benefited the U.S.
Treasury market. To avoid the volatility stemming from the "Asian Flu" we
maintained a neutral duration in the Fund during the period. We did not feel
that the market uncertainty regarding interest rate swings justified an
aggressive duration stance.
At the end of the period the Fund was invested about equally in U.S.
Government Obligations and Federal Agencies. Within the Federal Agency sector
was approximately 23% of mortgage backed securities. The weighting of Federal
Agencies and mortgages contributed to the increase in the Fund's yield.
U.S. GOVERNMENT INCOME SERIES
SECTOR DIVERSIFICATION
<TABLE>
<S> <C>
U.S. Government Obligations 51.5%
Federal Agencies 48.5%
</TABLE>
The Virtus U.S. Government Income Series performed well during the six
month period ended January 31, 1998 posting a total return of 3.73%. This
performance compares favorably to the 3.58% average return for the same period
tracked by Lipper Analytical Services for short-term intermediate U.S.
Government funds. The performance is attributed to favorable sector weightings
and an environment of declining interest rates during the period.
4
<PAGE> 6
PERFORMANCE OF SECURITY FIRST TRUST GROWTH AND INCOME SERIES, BOND SERIES,
EQUITY SERIES AND U.S. GOVERNMENT INCOME SERIES
The following are the average annual and total returns for each series for
the period ending December 31, 1997, assuming an investment of $10,000 at the
start of the period, and redemption at the end of the period, with dividends
reinvested. These returns are based on past experience. Future values of shares
will fluctuate so that their redemption values may be more or less than original
cost.
Average Annual Total Returns
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 Years 10 Years
- ---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Growth and
Income
Series(1)(2) 27.19% 26.59% 18.95% 16.16%
Bond
Series(1)(2) 9.06% 9.40% 6.72% 7.57%
Equity
Series(1)(3) 29.35% 25.21% N/A*
U.S.
Government
Income(1)(3) 7.03% 7.95% N/A*
Consumer
Price Index 1.73% 2.52% 2.59% 3.41%
</TABLE>
*Funds were introduced as of May 1993
Compound Total Returns
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 Years 10 Years
- ---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Growth and
Income
Series(1)(2) 27.19% 102.86% 138.17% 347.17%
Bond
Series(1)(2) 9.06% 30.95% 38.41% 107.42%
Equity
Series(1)(3) 24.35% 96.29% N/A*
U.S.
Government
Income(1)(3) 7.03% 25.81% N/A*
Consumer
Price Index 1.73% 7.76% 13.64% 39.77%
</TABLE>
* Funds were introduced as of May 1993.
(1) Return is computed after deduction of all series expenses, but before
deduction of actuarial risk charges and other fees of the variable annuity
account.
(2) From inception to July 1983, Security First Investment Management
Corporation reimbursed the Growth and Income Series for expenses in excess of
the maximum expense limitation, and these reimbursements were repaid from August
1983 to July 1986. Likewise, the Bond Series was reimbursed for excess expenses
from inception to July 1985, and these reimbursements were repaid from August
1985 to July 1993. Reimbursement of expenses to a series increases average
annual reimbursements reduces these returns.
(3) While they are not obligated to do so, Security Management and Virtus
have agreed to continue, until notice to the contrary, to defer their fees (and
make contributions in respect of excess expenses) in order to maintain the
expense ratios of the Virtus Equity and the Virtus U.S. Government Income Series
at a level of 1.00% and .70% respectively, or less.
5
<PAGE> 7
SECURITY FIRST TRUST T. ROWE PRICE GROWTH AND INCOME SERIES
The graph and Per Share Data Table below illustrate the growth in per
share value for the period ending December 31, 1997, of one share of the
Security First Trust T. Rowe Price Growth and Income Series purchased on August
1, 1979, at the price of $5.07 assuming that dividends and capital gains were
reinvested.
The results shown should not be considered a representation of the income
that may be earned by investing in the Series today. The value of variable
annuities funded by shares in this Series will be reduced by any actuarial risk
charges.
GROWTH AND INCOME SERIES
Per Share Value with
Dividends and Capital
Gains Reinvested
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996 1997
- ---- ---- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
22.80 25.54 25.48 30.58 33.05 38.97 39.47 52.08 63.78
22.71 25.82 26.84 31.24 33.41 37.82 40.46 52.15 64.68
23.45 26.00 27.57 30.93 34.49 36.49 41.23 53.36 63.03
24.94 25.29 27.53 32.18 34.61 37.25 42.12 53.55 65.04
25.99 26.71 28.78 32.30 35.21 37.86 43.28 54.32 68.76
26.36 26.28 27.83 31.63 35.45 37.24 43.79 54.83 71.62
28.43 25.86 28.59 32.53 35.37 38.06 45.04 53.05 75.77
29.14 23.66 28.55 31.63 36.58 39.62 45.65 54.50 73.09
28.65 22.03 28.44 31.94 36.62 38.91 47.15 56.50 76.43
26.73 21.43 28.89 31.67 37.34 39.59 47.03 59.00 74.08
26.48 22.88 27.57 32.49 36.94 38.28 49.31 62.00 75.92
26.64 23.70 30.07 32.80 37.49 38.51 50.49 61.00 78.12
</TABLE>
PER SHARE DATA
<TABLE>
<CAPTION>
Per Share
Value with Cumulative
Calendar Net Dividend Dividends & Change
Year Asset & Capital Capital Gains Yearly from
Ending Value Gains Reinvested Change 8/1/79
- -------- ----- ---------- ------------- ------ ----------
<S> <C> <C> <C> <C> <C>
1981 $5.41 $1.69 $8.14 -1.3% +60.6%
1982 5.95 .41 9.73 +19.5 +93.9
1983 7.27 .28 12.45 +28.0 +145.6
1984 6.75 .51 12.48 +0.2 +146.1
1985 7.84 .30 15.11 +21.1 +198.1
1986 7.76 .59 16.07 +6.3 +216.9
1987 5.98 2.62 17.47 +8.8 +244.6
1988 6.97 .41 21.56 +23.4 +325.3
1989 7.52 1.09 26.64 +23.6 +425.4
1990 6.25 .44 23.70 -11.0 +367.5
1991 7.69 .24 30.07 +26.9 +493.1
1992 8.17 .22 32.80 +9.1 +546.9
1993 9.12 .22 37.49 +14.3 +639.4
1994 9.05 .32 38.51 +2.7 +659.6
1995 11.52 .34 50.49 +31.1 +895.8
1996 13.18 .83 61.42 +21.7 +1111.4
1997 15.52 1.24 78.12 +27.2 +1440.8
</TABLE>
SECURITY FIRST TRUST
BOND SERIES
The graph and Per Share Data Table below illustrate the growth in per
share value for the period ending December 31, 1997, of one share of the
Security First Trust Bond Series purchased on August 1, 1979, at a price of
$3.12 assuming that dividends and capital gains were reinvested.
The results shown should not be considered a representation of the income
that may be earned by investing in the Series today. The value of variable
annuities funded by shares in this Series will be reduced by any actuarial risk
charges.
BOND SERIES
Per Share Value with
Dividends and Capital
Gains Reinvested
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996 1997
- ---- ---- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
7.65 8.20 8.86 9.88 10.90 11.83 11.47 13.29 13.59
7.59 8.26 8.89 9.88 11.09 11.59 11.71 13.04 13.62
7.65 8.22 8.94 9.82 11.15 11.38 11.77 12.93 13.48
7.75 8.09 9.04 9.88 11.20 11.29 11.92 12.88 13.67
7.89 8.29 9.09 10.03 11.20 11.27 12.34 12.85 13.78
8.09 8.44 9.04 10.19 11.42 11.26 12.43 12.96 13.93
8.21 8.52 9.16 10.49 11.48 11.37 12.38 12.95 14.29
8.15 8.39 9.36 10.57 11.68 11.42 12.53 12.95 14.16
8.19 8.44 9.54 10.70 11.77 11.27 12.63 13.40 14.39
8.33 8.50 9.64 10.59 11.77 11.26 12.83 13.50 14.61
8.37 8.63 9.71 10.57 11.66 11.22 13.01 13.42 14.63
8.39 8.76 10.06 10.70 11.72 11.31 13.21 13.40 14.81
</TABLE>
PER SHARE DATA
<TABLE>
<CAPTION>
Per Share
Value with Cumulative
Calendar Net Dividend Dividends & Change
Year Asset & Capital Capital Gains Yearly from
Ending Value Gains Reinvested Change 8/1/79
- ------- ------- --------- ------------- ------- -----------
<S> <C> <C> <C> <C> <C>
1981 $3.28 $ .36 $3.81 +22.9% +22.1%
1982 3.93 0.00 4.56 +19.8 +46.3
1983 3.79 .31 4.78 +4.7 +53.2
1984 3.87 .28 5.26 +10.1 +68.6
1985 4.15 .33 6.14 +16.8 +96.9
1986 4.38 .30 6.95 +13.2 +122.8
1987 3.83 .66 7.14 +2.8 +128.8
1988 3.77 .28 7.55 +5.7 +142.1
1989 3.89 .30 8.39 +11.1 +168.9
1990 3.52 .54 8.76 +4.4 +180.8
1991 3.79 .25 10.06 +14.8 +222.4
1992 3.80 .23 10.70 +6.4 +242.9
1993 3.94 .22 11.72 +9.5 +275.6
1994 3.58 .22 11.31 -3.5 +262.5
1995 3.94 .24 13.21 +16.8 +323.4
1996 3.82 .24 13.58 +2.8 +335.3
1997 3.95 .21 14.81 +9.1 +374.6
</TABLE>
6
<PAGE> 8
SECURITIES FIRST TRUST
VIRTUS EQUITY SERIES
The Per Share Data Table below illustrates the growth in per share value
for the period ending December 31, 1997, of one share of the Security First
Trust Virtus Equity Series purchased on May 19, 1993, at a price of $5.00
assuming that dividends and capital gains were reinvested.
The results shown should not be considered a representation of the income
that may be earned by investing in the Series today. The value of variable
annuities funded by shares in this Series will be reduced by any actuarial risk
charges.
PER SHARE DATA
<TABLE>
<CAPTION>
Per Share
Value with Cumulative
Calendar Net Dividend Dividends & Change
Year Asset & Capital Capital Gains Yearly from
Ending Value Gains Reinvested Change 5/19/93
- -------- ----- --------- -------------- ------ -----------
<S> <C> <C> <C> <C> <C>
1993 $5.15 $.03 $5.18 +3.6% +3.6%
1994 4.78 .05 4.85 -6.3 -3.0
1995 5.91 .21 6.21 +28.0 +24.2
1996 6.45 .55 7.36 +18.5 +47.2
1997 7.63 .72 9.52 +29.3 +90.4
</TABLE>
+change from 5-19-93 to 12-31-93
SECURITY FIRST TRUST VIRTUS
U.S. GOVERNMENT INCOME SERIES
The Per Share Data Table below illustrates the growth in per share value
for the period ending December 31, 1997, of one share of the Security First
Trust Virtus U.S. Government Income Series purchased on May 19, 1993, at a price
of $5.00 assuming the dividends and capital gains were reinvested.
The results shown should not be considered a representation of the income
that may be earned by investing in the Series today. The value of variable
annuities funded by shares in this Series will be reduced by any actuarial risk
charges.
PER SHARE DATA
<TABLE>
<CAPTION>
Per Share
Value with Cumulative
Calendar Net Dividend Dividends & Change
Year Asset & Capital Capital Gains Yearly from
Ending Value Gains Reinvested Change 5/19/93
- -------- ----- --------- ------------- -------- ----------
<S> <C> <C> <C> <C> <C>
1993 $5.04 $.08 $5.11 2.2% +2.2%
1994 4.74 .14 4.96 -2.9 -0.8
1995 5.18 .20 5.63 +13.5 +12.6
1996 5.14 .22 5.83 +3.6 +16.6
1997 5.26 .24 6.24 +7.0 +24.8
</TABLE>
+change from 5-19-93 to 12-31-93
7
<PAGE> 9
SECURITY FIRST TRUST
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
T. Rowe Price Virtus
Growth and Virtus U.S. Government
Income Equity Income
Bond Series Series Series Series
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investments at market - Note A and Schedule I:
Investment securities (cost:
Bond Series - $12,090,461; Growth
and Income Series - $173,538,720;
Equity Series - $42,686,036;
U.S. Government Income Series - $32,138,726) $ 12,546,810 $ 239,039,677 $ 51,490,442 $ 32,884,908
Cash 872,159 1,660,480 1,713,342 1,382,804
Receivable for securities sold 267,550 1,500,000 3,530
Receivable for capital shares purchased 78,538 101,604
Interest receivable 175,527 4,729 6,568 635,510
Dividends receivable 288,649 72,801
Prepaid insurance 240 4,605 1,062 651
------------- ------------- ------------- -------------
13,940,824 242,599,744 53,284,215 34,907,403
LIABILITIES
Payable for securities purchased 402,206 1,990,528 567,125
Payable for capital shares redeemed 20,638 6,608
Payable to investment adviser - Note B 3,773 67,356 29,934 12,434
Payable for directors' fees 380 5,415 956 324
Accrued expenses 5,963 41,343 9,979 8,119
------------- ------------- ------------- -------------
412,322 2,104,642 628,632 27,485
NET ASSETS
Composed of:
Capital shares (authorized 100,000,000 shares
of $.01 par value for each series) 13,073,623 174,713,579 43,966,744 33,998,839
Undistributed net investment income 68,213 280,566 41,624 177,182
Undistributed net realized loss (69,683) (157,191) (42,285)
Net unrealized appreciation of investments 456,349 65,500,957 8,804,406 746,182
------------- ------------- ------------- -------------
Net assets $ 13,528,502 $ 240,495,102 $ 52,655,583 $ 34,879,918
============= ============= ============= =============
Capital shares outstanding 3,373,716 15,631,965 6,864,190 6,550,658
Net asset value per share $ 4.01 $ 15.38 $ 7.67 $ 5.32
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 10
SECURITY FIRST TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
T. Rowe Price Virtus
Growth and Virtus U.S. Government
Income Equity Income
Bond Series Series Series Series
----------- -------------- ----------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $1,942,268 $ 416,069
Interest $ 392,914 898,996 49,645 $ 1,016,311
Miscellaneous income 27 70
---------- ---------- ----------- -----------
392,914 2,841,291 465,784 1,016,311
EXPENSES
Custodian fees 6,963 22,100 8,647 5,327
Adviser fees - Note B 20,485 386,532 188,382 122,035
Management fees - Note B 8,780 165,656 37,676 24,407
Printing expenses 4,030 40,107 9,142 8,832
Audit fees 667 1,995 2,984 545
Insurance expenses 366 6,967 1,605 986
Directors' fees and expenses 596 12,717 3,067 1,679
Taxes, licenses and fees 58 58 58 58
Miscellaneous expenses 2,328 3,700 1,872
---------- ---------- ----------- -----------
41,945 638,460 255,261 165,741
Less: Waiver of management fees (220) (206)
Waiver of adviser fees (19,577) (66,227)
---------- ---------- ----------- -----------
41,945 638,460 235,464 99,308
---------- ---------- ----------- -----------
Net investment income 350,969 2,202,831 230,320 917,003
NET REALIZED AND UNREALIZED GAINS
(LOSSES)ON INVESTMENTS - Notes A and C
Net realized gain on sale of investments 69,739 2,460,779 3,026,021 9,601
Net unrealized appreciation (depreciation)
of investments during the period 189,394 344,339 (1,831,706) 333,781
---------- ---------- ----------- -----------
Net gain on investments 259,133 2,805,118 1,194,315 343,382
---------- ---------- ----------- -----------
Increase in net assets
resulting from operations $ 610,102 $5,007,949 $ 1,424,635 $ 1,260,385
========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 11
SECURITY FIRST TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
T. Rowe Price Virtus
Growth and Virtus U.S. Government
Income Equity Income
Bond Series Series Series Series
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Operations:
Net investment income $ 350,969 $ 2,202,831 $ 230,320 $ 917,003
Net realized gain on sale of investments 69,739 2,460,779 3,026,021 9,601
Net unrealized appreciation (depreciation)
of investments during the period 189,394 344,339 (1,831,706) 333,781
------------- ------------- ------------- -------------
Increase in net assets
resulting from operations 610,102 5,007,949 1,424,635 1,260,385
Distributions to shareowners from:
Net investment income (647,867) (4,191,181) (482,528) (1,507,408)
Net realized gains (13,443,002) (4,086,984)
Capital share transactions - Note D:
Reinvestment of net investment income
distributed 647,867 4,191,181 482,528 1,507,408
Reinvestment of net realized gains
distributed 13,443,002 4,086,984
Sales of capital shares 3,179,711 33,340,160 5,963,450 5,856,943
Redemptions of capital shares (896,031) (2,556,105) (2,303,971) (1,126,870)
------------- ------------- ------------- -------------
Increase in net assets from
capital share transactions 2,931,547 48,418,238 8,228,991 6,237,481
------------- ------------- ------------- -------------
Total increase in net assets 2,893,782 35,792,004 5,084,114 5,990,458
Net Assets:
Beginning of period 10,634,720 204,703,098 47,571,469 28,889,460
------------- ------------- ------------- -------------
End of period (including undistributed net
investment income: Bond Series -
$68,213; Growth and Income
Series - $280,566; Equity
Series - $41,624; U.S. Government
Income Series - $177,182) $ 13,528,502 $ 240,495,102 $ 52,655,583 $ 34,879,918
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 12
SECURITY FIRST TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JULY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
T. Rowe Price Virtus
Growth and Virtus U.S. Government
Income Equity Income
Bond Series Series Series Series
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Operations:
Net investment income $ 623,673 $ 3,650,955 $ 486,025 $ 1,170,007
Net realized gain on sale of investments 94,297 12,767,189 1,259,322 54,633
Net unrealized appreciation of
investments during the year 226,803 38,374,380 11,009,490 508,296
------------- ------------- ------------- -------------
Increase in net assets
resulting from operations 944,773 54,792,524 12,754,837 1,732,936
Distributions to shareowners from:
Net investment income (584,627) (2,941,810) (439,597) (779,578)
Net realized gains (5,408,660) (1,801,912)
Capital share transactions - Note D:
Reinvestment of net investment income
distributed 584,627 2,941,810 439,597 779,578
Reinvestment of net realized gains
distributed 5,408,660 1,801,912
Sales of capital shares 2,732,192 45,115,260 15,570,582 13,139,907
Redemptions of capital shares (2,023,610) (7,757,579) (1,455,726) (872,207)
------------- ------------- ------------- -------------
Increase in net assets from
capital share transactions 1,293,209 45,708,151 16,356,365 13,047,278
------------- ------------- ------------- -------------
Total increase in net assets 1,653,355 92,150,205 26,869,693 14,000,636
Net Assets:
Beginning of year 8,981,365 112,552,893 20,701,776 14,888,824
------------- ------------- ------------- -------------
End of year (including undistributed net
investment income: Bond Series -
$365,111; Growth and Income
Series - $2,268,916; Equity
Series - $293,831; U.S. Government
Income Series - $767,587) $ 10,634,720 $ 204,703,098 $ 47,571,469 $ 28,889,460
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE> 13
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- --------- --------- ----------
<S> <C> <C> <C>
CORPORATE NOTES 39.0%
Aerospace & Defense: 2.2%
Boeing Co., 8.75%, 08/15/21 $ 50,000 $ 63,125
Raytheon Co., 6.75%, 08/15/07 200,000 207,000
--------
270,125
Automobiles & Related: 3.1%
Ford Motor Credit, 9.50%, 04/15/00 50,000 53,875
GMAC Corporate Bond, 9.63%, 12/15/01 100,000 112,625
Mark IV Industries, Inc., 7.75%, 04/01/06 120,000 122,850
United Auto Group, 11.00%, 07/15/07 120,000 105,750
--------
395,100
Banking: 4.5%
Banc One Corp., 7.75%, 07/15/25 300,000 336,750
HSBC Fin Nederland Bank, 7.40%, 04/15/03 100,000 105,000
National Australia Bank, 9.70%,10/15/98 125,000 128,281
--------
570,031
Building Materials & Garden Supplies: 1.8%
American Standard, Inc.,10.88%, 05/15/99 60,000 63,450
Congoleum Corp., 9.00%, 02/01/01 60,000 60,825
NBTY, Inc., 8.63%, 09/15/07 100,000 102,500
--------
226,775
Computer & Office Equipment: 3.1%
Hydrochem Industrial Service, Inc., 10.375%, 08/01/07 85,000 89,356
Ikon Office Solutions, 7.3%, 11/01/27 215,000 229,513
Printpack, Inc., 10.625%, 08/15/06 60,000 65,175
--------
384,044
</TABLE>
12
<PAGE> 14
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- --------- --------- ----------
<S> <C> <C> <C>
CORPORATE NOTES (CONTINUED)
Electric and Electronic Equipment: 1.8%
General Electric Capital, 9.38%, 10/06/98 $125,000 $127,939
Honeywell, Inc., 6.60%, 04/15/01 100,000 102,500
--------
230,439
Electric Utilities: 1.6%
National Rural Utilities, 6.50%, 09/15/02 100,000 102,625
Public Service Electric & Gas Co., 6.25%, 01/01/07 100,000 101,250
--------
203,875
Finance & Credit: 4.8%
Chase Mortgage Securities, 6.60%, 12/19/29 110,000 110,740
Commercial Credit Group, 9.60%, 05/15/99 50,000 52,342
Margaretten Financial, 6.75%, 06/15/00 100,000 101,875
Standard Credit Card, 7.25%, 04/07/08 100,000 108,115
UCFC Trust, 6.48%, 05/15/12 230,000 231,527
--------
604,599
Food & Beverages: 1.7%
Ameriserve Food Co., 10.125%, 07/15/07 85,000 91,800
Doskocil Manufacturing Inc., 10.125%, 09/15/07 60,000 63,000
Southern Foods Group, 9.875%, 09/01/07 60,000 63,900
--------
218,700
Forest Products: 1.5%
Noranda Forest, Inc., 7.50%, 07/15/03 100,000 106,250
Stone Container Corp., 12.25%, 04/01/02 80,000 82,500
--------
188,750
Insurance Carriers: 0.8%
Prudential Insurance Co. America, 6.88%, 04/15/03 100,000 103,125
</TABLE>
13
<PAGE> 15
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- --------- --------- ----------
<S> <C> <C> <C>
CORPORATE NOTES (CONTINUED)
Media & Communications: 1.1%
Heritage Media Corp., 8.75%, 02/15/06 $130,000 $139,263
Miscellaneous Consumer Products: 3.9%
French Fragrances, Inc., 10.375%, 05/15/07 60,000 64,200
Kevco, Inc., 10.375%, 12/01/07 120,000 123,900
Motors & Gears, Inc., 10.75%, 10/15/06 60,000 65,500
Playtex Products, Inc., 8.875%, 07/15/04 85,000 88,507
Revlon Worldwide Parent, 0.00%, 03/15/01 120,000 88,800
S C International Services, Inc., 9.25%, 09/01/07 60,000 63,150
--------
494,057
Oil and Gas Extraction: 0.8%
Quaker State Corp., 6.63%, 10/15/05 100,000 102,500
Security, Commodity Brokers & Services: 3.5%
Lehman Brothers, 8.50%, 05/01/07 100,000 114,125
Smith Barney, Inc., 7.38%, 05/15/07 300,000 322,875
--------
437,000
Telephone Communication: 1.1%
GTE Corp., 8.85%, 03/01/98 50,000 50,106
U.S. West Communications, 7.50%, 06/15/23 80,000 82,400
--------
132,506
Textile Mill Products: 1.0%
GFSI, Inc., 9.625%, 03/01/07 60,000 62,850
Polymer Group, Inc., 9.00%, 07/01/07 60,000 62,175
--------
125,025
</TABLE>
14
<PAGE> 16
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- --------- --------- ----------
<S> <C> <C> <C>
CORPORATE NOTES (CONTINUED)
Transportation: 0.5%
Newport News Shipbuilding, Inc., 9.25%, 12/01/06 $ 60,000 $ 64,500
----------
TOTAL CORPORATE NOTES
(COST $4,725,566) 4,890,414
FEDERAL AGENCIES 28.0%
Federal Home Loan Bank: 1.6%
5.50%, 01/10/01 200,000 199,828
Federal Home Loan Mortgage Corp.: 2.2%
7.13%, 07/21/99 235,000 240,311
9.00%, 01/01/17 3,426 3,666
9.50%, 04/01/19 27,289 29,251
9.00%, 06/01/19 14,060 15,045
----------
288,273
Federal National Mortgage Assn.: 4.4%
8.35%, 11/10/99 175,000 183,045
7.50%, 08/25/21 9,069 9,224
6.92%, 03/19/07 75,000 80,772
6.21%, 11/07/07 55,000 56,491
6.75%, 12/10/07 225,000 228,621
----------
558,153
</TABLE>
15
<PAGE> 17
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- --------- --------- ----------
<S> <C> <C> <C>
FEDERAL AGENCIES (CONTINUED)
Government National Mortgage Assn.: 19.7%
7.50%, 10/15/23 $223,523 $230,368
7.50%, 06/15/23 131,696 135,729
7.00%, 01/15/24 166,666 169,269
7.00%, 03/15/24 155,145 157,568
7.00%, 02/15/26 733,326 744,780
9.50%, 01/15/25 51,617 56,085
9.50%, 05/15/25 31,922 34,685
9.00%, 04/15/09 4,085 4,359
9.00%, 05/15/09 19,162 20,449
9.00%, 05/15/09 6,544 6,983
9.00%, 05/15/09 7,268 7,757
9.00%, 05/15/09 3,938 4,202
9.00%, 05/15/09 3,421 3,651
9.00%, 05/15/09 17,307 18,470
11.25%, 07/15/13 1,570 1,756
10.00%, 08/15/16 16,519 18,063
10.00%, 06/15/17 27,676 30,590
10.00%, 11/15/17 27,049 29,577
11.50%, 11/15/15 58,003 65,906
10.00%, 03/15/20 36,287 39,336
11.50%, 02/15/18 8,750 9,942
10.00%, 03/15/19 51,533 56,347
11.25%, 09/15/15 82,221 91,984
9.25%, 05/15/20 30,482 32,740
9.25%, 07/15/17 57,267 61,509
9.25%, 01/15/20 31,539 33,875
9.25%, 9/15/21 26,395 28,350
9.25%, 06/15/21 63,399 68,095
9.25%, 04/15/21 74,256 79,756
9.25%, 07/15/21 42,138 45,259
</TABLE>
16
<PAGE> 18
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- --------- --------- ----------
<S> <C> <C> <C>
FEDERAL AGENCIES (CONTINUED)
9.25%, 05/15/21 $ 89,970 $ 96,634
7.00%, 08/15/23 92,252 93,693
-----------
2,477,767
TOTAL FEDERAL AGENCIES
(COST $ 3,430,267) 3,524,021
U.S. GOVERNMENT OBLIGATIONS 26.7%
U.S. Treasury Bonds: 7.1%
8.75%, 08/15/20 100,000 135,426
8.00%, 11/15/21 150,000 189,750
7.25%, 08/15/22 250,000 293,457
6.875%, 08/15/25 235,000 266,694
-----------
885,327
U.S. Treasury Notes: 19.6%
3.375%, 01/15/07 250,000 244,605
6.63%, 04/30/02 575,000 600,886
6.38%, 05/15/99 395,000 425,143
7.75%, 11/30/99 15,000 15,622
7.75%, 12/31/99 165,000 172,130
5.625%, 11/30/00 330,000 332,234
7.00%, 07/15/06 100,000 109,532
6.50%, 10/15/06 525,000 558,312
-----------
2,458,464
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $3,146,044) 3,343,791
-----------
TOTAL FIXED MATURITIES
(COST $11,301,877) 11,758,226
</TABLE>
17
<PAGE> 19
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Short-Term Investments Portfolio Principal Value
- ---------------------- --------- --------- ----------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS 6.3%
Federal Home Loan Mortgage Corp.: 6.3%
5.37%, 02/12/98 $790,000 $ 788,584
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $788,584) 788,584
-----------
TOTAL INVESTMENTS
(COST $12,090,461) 100.0% 12,546,810
Other assets less liabilities 981,692
-----------
NET ASSETS $13,528,502
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE> 20
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- --------- -------- ----------
<S> <C> <C> <C>
CAPITAL EQUIPMENT 4.3%
Electrical Equipment: 3.5%
General Electric Co. 50,000 $ 3,875,000
Honeywell, Inc. 30,000 2,101,875
Hubbell, Inc. Class B 40,000 2,002,500
CBS Corp. 75,000 2,245,312
-----------
10,224,687
Machinery: 0.8%
Pall Corp. 100,000 1,993,750
CONSUMER CYCLICALS 0.8%
Automobiles & Related: 0.8%
Genuine Parts Co. 60,000 1,991,250
CONSUMER NONDURABLES 23.3%
Food & Beverages: 6.5%
Anheuser-Busch Company, Inc. 50,000 2,246,875
Best Foods 12,000 1,170,000
Corn Products International, Inc.* 3,000 90,000
General Mills, Inc. 25,000 1,860,938
Int'l. Flavors & Fragrance 50,000 2,112,500
McCormick & Co. 75,000 2,189,062
Pepsico, Inc. 50,000 1,806,250
Quaker Oats Company 30,000 1,612,500
Ralston-Ralston Purina Group 20,000 1,877,500
-----------
14,965,625
</TABLE>
*Non-income producing
19
<PAGE> 21
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- --------- --------- ----------
<S> <C> <C> <C>
CONSUMER NONDURABLES (CONTINUED)
Health Services: 1.9%
Baxter International, Inc. 30,000 $ 1,670,625
United States Surgical Corp. 100,000 2,856,250
-----------
4,526,875
Miscellaneous Consumer Products: 7.2%
Black & Decker Corp. 50,000 2,400,000
Colgate Palmolive Co. 30,000 2,197,500
Corporate Express, Inc. 150,000 1,326,562
Eastman Kodak 40,000 1,581,562
Fortune Brands, Inc. 25,000 965,250
Philip Morris Companies, Inc. 60,000 2,490,000
Owens Corning Fiber 70,000 1,946,875
UST, Inc. 75,000 2,587,500
Waste Management, Inc. 70,000 1,645,000
-----------
17,140,249
Pharmaceuticals: 7.7%
Abbott Laboratories 40,000 2,832,500
American Home Products 30,000 2,863,125
Amgen* 50,000 2,500,000
Johnson & Johnson 30,000 2,008,125
Pharmacia-Upjohn, Inc. 36,250 1,397,890
Schering-Plough Corp. 40,000 2,895,000
Smith-Kline Beecham PLC ADR 60,400 3,812,750
-----------
18,309,390
</TABLE>
*Non-income producing
20
<PAGE> 22
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- --------- --------- ----------
<S> <C> <C> <C>
CONSUMER SERVICES 11.2%
Entertainment & Leisure: 1.6%
Hilton Hotels Corp. 100,000 $ 2,837,500
Readers Digest Assn., Inc. 35,000 896,875
-----------
3,734,375
General Merchandise Stores: 6.4%
Dayton Hudson Corp. 45,000 3,237,187
J.C. Penney, Inc. 20,000 1,347,500
Limited, Inc. 75,000 1,987,500
Neiman-Marcus Group, Inc.* 75,000 2,540,625
Toys R Us, Inc.* 60,000 1,608,750
Tupperware Corp. 90,000 2,300,625
Walmart Stores 50,000 1,990,625
-----------
15,012,812
Media & Communications: 3.2%
Dun & Bradstreet Corp. 40,000 1,275,000
Knight Ridder, Inc. 40,000 2,202,500
McGraw Hill, Inc. 26,000 1,815,125
Meredith Corp. 60,000 2,351,250
-----------
7,643,875
ENERGY 7.6%
Oil And Gas Extraction: 7.6%
Amerada Hess Corp. 44,600 2,439,062
Atlantic Richfield Co. 24,000 1,785,000
British Petroleum PLC 30,000 2,409,375
Chevron Corp. 20,000 1,495,000
Exxon Corp. 36,000 2,135,250
Mobil Corp. 16,000 1,096,000
</TABLE>
*Non-income producing
21
<PAGE> 23
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- --------- --------- ----------
<S> <C> <C> <C>
ENERGY (CONTINUED)
Occidental Petroleum Corp. 80,000 $ 2,040,000
Royal Dutch Petroleum Co. ADR 40,000 2,050,000
Texaco, Inc. 30,600 1,596,937
Unocal Corp. 25,000 859,375
-----------
17,905,999
FINANCIAL 15.6%
Banking: 4.2%
Bankers Trust New York Corp. 20,000 2,088,750
Chase Manhattan Corp. 15,000 1,607,813
Mellon Bank Corp. 50,000 3,018,750
National City Corp. 20,000 1,203,750
Wells Fargo & Co. 6,666 2,059,794
-----------
9,978,857
Federal Agencies: 1.1%
Federal Home Loan Mortgage Corp. 60,000 2,670,000
Financial Services: 5.8%
American Express Co. 52,000 4,351,750
H&R Block, Inc. 50,000 2,193,750
J.P. Morgan & Co., Inc. 15,000 1,517,813
Mercury Finance Co.* 96,800 66,550
Travelers Group, Inc. 110,365 5,469,966
-----------
13,599,829
</TABLE>
*Non-income producing
22
<PAGE> 24
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- --------- --------- ----------
<S> <C> <C> <C>
FINANCIAL (CONTINUED)
Insurance Carriers: 4.5%
Loews Corp. 25,000 $ 2,496,875
St. Paul Companies, Inc. 30,000 2,610,937
Travelers Aetna P&C 40,000 1,670,000
U S F & G Corp. 80,000 1,910,000
Willis Corroon Group PLC Sponsored ADR 175,000 1,979,688
-----------
10,667,500
PROCESS INDUSTRIES 8.7%
Chemicals And Allied Products: 4.8%
Corning, Inc. 45,000 1,538,437
Dow Chemical Co. 30,000 2,700,000
Dupont Co. 34,000 1,925,250
Great Lakes Chemical Corp. 50,000 2,184,375
Imperial Chemical ADR 30,000 1,826,250
Minnesota Mining & Manufacturing Co. 13,000 1,085,500
-----------
11,259,812
Forest Products: 0.9%
Georgia Pacific Corp. 18,000 992,250
Georgia Pacific (Timber Group) 18,000 418,500
Weyerhaeuser Co. 15,000 747,188
-----------
2,157,938
Metal Mining: 2.3%
Inco Ltd. 100,000 1,775,000
Newmont Mining Corp. 75,000 2,137,500
Reynolds Metals Co. 25,000 1,576,563
-----------
5,489,063
</TABLE>
23
<PAGE> 25
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- --------- --------- ----------
<S> <C> <C> <C>
PROCESS INDUSTRIES (CONTINUED)
Paper and Allied Products: 0.7%
International Paper Co. 25,000 $ 1,142,188
Union Camp Corp. 15,000 857,813
-----------
2,000,001
TECHNOLOGY 2.5%
Computer and Office Equipment: 2.5%
First Data Corp. 100,000 3,062,500
Intuit* 75,000 2,803,125
-----------
5,865,625
TRANSPORTATION 5.9%
Aerospace and Defense: 3.0%
Allied Signal, Inc. 75,000 2,920,313
Olin Corp. 35,900 1,546,700
Raytheon Co., CL B 50,000 2,600,250
-----------
7,067,263
Railroad Transportation: 2.9%
Burlington Northern Santa Fe 25,000 2,168,750
Norfolk Southern Corp. 90,000 2,840,625
Union Pacific Corp. 30,000 1,800,000
-----------
6,809,375
UTILITIES 6.8%
Telephone Communication: 3.7%
AT&T Co. 60,000 3,757,500
Frontier Corp. 70,000 1,824,375
GTE Corp. 40,000 2,180,000
Southern New England Telecom Corp. 17,000 1,107,125
-----------
8,869,000
</TABLE>
*Non-income producing
24
<PAGE> 26
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- --------- --------- ----------
<S> <C> <C> <C>
UTILITIES (CONTINUED)
Utility Holding Companies: 3.1%
Edison International 50,000 $ 1,343,750
Entergy Corp. 22,000 629,750
GPU 16,000 629,000
Peco Energy Co. 50,000 946,875
Pacificorp 70,000 1,623,125
Unicom Corp. 75,000 2,325,000
------------
7,497,500
------------
TOTAL EQUITY SECURITIES
(COST $141,879,693) 207,380,650
Percentage
of Market
Value of Market
Portfolio Principal Value
--------- --------- ----------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS
Commercial Paper: 13.3%
Abbott Laboratories Corp., 5.44%, 02/18/98 10,000,000 9,972,759
General Motors Acceptance Corp., 5.50%, 03/02/98 2,000,000 1,990,832
International Lease Finance., 5.51%, 02/13/98 4,500,000 4,490,769
Caisse Des Depots., 5.50%, 02/23/98 4,000,000 3,985,936
Preferred Receivables Fund., 5.48%, 02/11/98 3,240,000 3,234,557
Rio Tinto America, Inc., 5.47%, 02/13/98 8,000,000 7,984,174
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $31,659,027) 31,659,027
TOTAL INVESTMENTS
(COST $173,538,720) 100.0% 239,039,677
Other assets less liabilities 1,455,425
------------
NET ASSETS $240,495,102
============
</TABLE>
The accompanying notes are an integral part of these statements.
25
<PAGE> 27
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- --------- --------- ----------
<S> <C> <C> <C>
CAPITAL EQUIPMENT 8.1%
Electrical Equipment: 6.8%
Amp, Inc. 3,500 $ 140,000
Applied Materials, Inc.* 6,000 196,875
General Electric Co. 17,100 1,325,250
Grainger W.W. Inc. 3,500 336,875
Harris Corp. 7,400 352,425
Proctor & Gamble Co. 10,200 799,425
Tandy Corp. 5,600 217,000
Whirlpool Corp. 2,300 132,969
------------
3,500,819
Machinery: 1.3%
Caterpillar, Inc. 8,600 412,800
Cooper Industries, Inc. 2,700 143,269
Cummins Engine, Inc. 2,300 123,050
------------
679,119
CONSUMER NONDURABLES 19.7%
Food & Beverages: 3.1%
Best Foods 1,600 156,000
Coca Cola 15,500 1,003,625
Corn Products International, Inc. 400 12,800
Kellogg Co. 5,400 249,413
Seagram Ltd. 4,500 153,562
------------
1,575,400
</TABLE>
*Non-income producing
26
<PAGE> 28
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- ----------- -------- ------------
<S> <C> <C> <C>
CONSUMER NONDURABLES (CONTINUED)
Health Services: 1.8%
Baxter International, Inc. 4,300 $ 239,456
Boston Scientific Corp. 2,800 142,100
Columbia/HCA Healthcare 8,000 200,000
Medtronic Inc. 6,600 337,013
---------
918,569
Miscellaneous Consumer Products: 4.3%
Browning Ferris Industries 6,800 235,025
Gillette Co. 4,400 434,500
Phillip Morris Companies Inc. 13,200 547,800
Unilever N. V. 17,600 1,004,300
---------
2,221,625
Pharmaceuticals: 10.5%
Abbot Laboratories 6,000 424,875
American Home Products Co. 5,800 553,538
Amgen* 2,800 140,000
Bristol Myers Squibb Co. 8,300 827,406
Johnson & Johnson 8,900 595,744
Eli Lilly & Co. 12,400 837,000
Pfizer Inc. 9,600 786,600
Pharmacia-Upjohn, Inc. 5,900 226,781
Schering Plough Corp. 5,900 427,012
Warner Lambert & Co. 3,800 571,900
---------
5,390,856
</TABLE>
*Non-income producing
27
<PAGE> 29
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- ----------- --------- -----------
<S> <C> <C> <C>
CONSUMER CYCLICALS 2.2%
Automobiles & Related: 2.2%
Chrysler Corp. 8,200 $ 285,463
Ford Motor Co. 12,800 652,800
Goodyear Tire And Rubber 3,400 212,925
----------
1,151,188
CONSUMER SERVICES 8.5%
Entertainment & Leisure: 0.7%
ITT Corp. New 3,700 296,000
General Merchandise Stores: 4.3%
CVS Corp. 2,600 170,463
Federated Department Stores* 4,200 177,975
May Dept. Stores Co. 4,600 241,788
Nordstrom, Inc. 3,500 178,063
J.C. Penney, Inc. 4,700 316,663
Pitney Bowes, Inc. 3,800 174,325
Sears Roebuck & Co. 6,300 290,192
V.F. Corp. 6,800 290,700
Walmart Stores 7,600 303,050
----------
2,143,219
Building Materials & Garden Supplies: 0.8%
Armstrong World Industries 2,600 185,250
Home Depot, Inc. 4,000 241,250
----------
426,500
Media & Communications: 2.7%
Walt Disney Co. 7,600 809,875
Time Warner, Inc. 5,500 353,031
Viacom, Inc.* 5,600 233,800
----------
1,396,706
</TABLE>
*Non-income producing
28
<PAGE> 30
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- ----------- --------- ------------
<S> <C> <C> <C>
ENERGY 8.1%
Oil And Gas Extraction: 8.1%
Chevron Corp. 6,400 $ 478,800
Diamond Offshore Drilling Inc. 9,000 402,188
Exxon Corp. 21,100 1,251,494
Mobil Corp. 7,400 504,125
Phillips Petroleum Co. 2,900 127,600
Royal Dutch Petroleum Co. ADR 21,300 1,091,625
Texaco, Inc. 2,800 145,774
----------
4,001,606
FINANCIAL 21.2%
Banking: 12.1%
Banc One Corp. 4,500 251,438
Bank Of New York, Inc. 4,400 238,425
Bankamerica Corp. 7,700 547,181
Bank of Boston Corp. 7,000 626,500
Chase Manhattan Corp. 1,300 139,344
Citicorp 2,900 345,100
Comerica, Inc. 2,100 198,188
Fifth Third Bancorp 3,150 240,188
First Chicago Corp. 3,600 268,650
First Union Corp. 8,600 413,338
Household International, Inc. 2,100 261,450
Key Corp. 2,700 175,500
Mellon Bank Corp. 4,000 241,500
National City Corp. 2,800 168,525
Nationsbank Corp. 11,662 699,720
Norwest Corp. 5,600 204,400
PNC Bank Corp. 3,900 201,094
Summit Bancorp 9,000 450,000
</TABLE>
*Non-income producing
29
<PAGE> 31
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- ----------- --------- ------------
<S> <C> <C> <C>
FINANCIAL (CONTINUED)
Wachovia Corp. 2,300 $ 178,823
Wells Fargo & Co. 1,100 339,900
----------
6,189,264
Federal Agencies: 1.1%
Federal Home Loan Mortgage Corp. 12,400 551,800
Financial Services: 3.5%
American Express Co. 6,200 518,863
Fleet Financial Group 10,700 766,388
Travelers Group, Inc. 10,350 512,324
----------
1,797,575
Insurance Carriers: 3.3%
Aetna, Inc. 2,900 213,150
Allstate Corp. 5,700 238,950
American General Corp. 3,400 191,675
American International Group 2,700 297,844
Cigna Corp. 700 118,694
Chubb Corp. 2,500 189,844
General Re Corp. 1,600 333,000
Lincoln National Corp. 1,800 136,238
Loews Corp. 2,200 219,586
MBIA, Inc. 3,000 194,250
Transamerica Corp. 2,000 205,500
----------
2,338,731
Investment Dealers: 1.2%
Merrill Lynch & Co, Inc. 4,300 271,438
Morgan Stanley Dean Witter 9,185 536,174
----------
807,612
</TABLE>
30
<PAGE> 32
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- ----------- --------- ------------
<S> <C> <C> <C>
PROCESS INDUSTRIES 4.7%
Chemicals and Allied Products: 2.8%
Air Products & Chemical 5,100 $ 408,319
Dow Chemical Co. 6,400 576,000
Dupont Co. 4,400 249,150
Minnesota Mining & Manufacturing Co. 2,500 208,750
----------
1,442,219
Forest Products: 0.3%
Weyerhaeuser Co. 2,900 144,456
Metal Mining: 0.6%
Alcan Aluminum Ltd. 5,000 147,188
USX-Marathon Group 5,300 177,881
----------
325,069
Paper And Allied Products: 1.0%
International Paper Co. 4,100 187,319
Union Camp Corp. 2,300 131,531
Willamette Industries, Inc. 6,200 207,700
----------
526,550
TECHNOLOGY 10.4%
Computer & Office Equipment: 10.4%
Cisco System Inc.* 8,700 548,644
Compaq Computer Corp. 10,800 324,675
Computer Association International Inc. 6,750 359,016
Dell Computer Corp.* 3,200 318,200
Digital Equipment Corp.* 3,800 214,938
Intel Corp. 10,500 850,500
International Business Machines Corp. 9,900 977,006
</TABLE>
*Non-income producing
31
<PAGE> 33
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- ----------- --------- ------------
<S> <C> <C> <C>
TECHNOLOGY (CONTINUED)
Micron Technologies 3,200 $ 110,800
Oracle Corp.* 8,600 199,950
Parametric Technology* 3,300 167,475
Texas Instruments 5,200 284,050
3 Com Corp.* 2,800 92,575
Xerox Corp. 5,900 474,212
----------
4,922,041
TRANSPORTATION 5.5%
Aerospace & Defense: 3.2%
Allied Signal, Inc. 4,600 444,613
Lockheed Martin Corp. 3,100 322,594
Raytheon Co. 3,300 172,013
TRW, Inc. 3,400 172,975
Textron, Inc. 5,100 305,044
United Technologies Corp. 3,000 244,874
----------
1,662,113
Airline Transportation: 0.8%
AMR Corporation.* 1,300 164,125
Delta Air Lines, Inc. 2,100 239,663
----------
403,788
Railroad Transportation: 1.5%
Burlington Northern Santa Fe 2,800 242,900
CSX Corp. 2,600 137,800
Norfolk Southern Corp. 6,600 208,313
Union Pacific 2,800 168,000
----------
757,013
</TABLE>
*Non-income producing
32
<PAGE> 34
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- ----------- --------- ------------
<S> <C> <C> <C>
UTILITIES 11.6%
Telephone Communication: 9.8%
AT&T Co. 18,100 $ 1,133,513
Airtouch Communications* 8,400 368,550
Bell Atlantic Corp. 10,000 925,625
Bell South Corp. 11,100 672,244
Lucent Technologies Inc. 5,200 460,200
MCI Communications Corp. 7,900 366,856
Sprint Corp. 5,300 314,688
U.S. West, Inc. 6,300 303,188
U.S. West, Inc. Media Group* 6,300 187,031
Worldcom Inc.* 7,900 282,912
-----------
5,014,807
Utility Holding Companies: 1.8%
Edison International 8,348 224,353
Duke Power Co. 6,128 332,061
PG&E Corp. 6,500 193,781
Southern Co. 6,400 155,600
-----------
905,795
TOTAL INVESTMENTS
(COST $42,686,036) 100.0% 51,490,442
Other Assets Less Liabilities 1,165,141
-----------
NET ASSETS $52,655,583
===========
</TABLE>
*Non-income producing
The accompanying notes are an integral part of these statements.
33
<PAGE> 35
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS U.S. GOVERNMENT INCOME SERIES
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- ----------- --------- ------------
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS 51.5%
U.S. Treasury Notes: 51.5%
5.875%, 01/31/99 1,000,000 $ 1,014,820
5.875%, 02/28/99 2,800,000 2,814,952
6.625%, 05/15/07 3,750,000 4,036,162
6.38%, 05/15/99 800,000 809,872
6.00%, 08/15/20 1,000,000 1,015,190
7.75%, 01/31/00 4,200,000 4,390,092
5.50%, 04/15/00 160,000 160,609
6.25%, 08/31/00 500,000 510,680
5.63%, 02/28/01 550,000 554,043
7.88%, 08/15/01 1,500,000 1,617,510
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $16,643,452) 16,923,930
FEDERAL AGENCIES 48.5%
Federal Farm Credit Bank: 6.9%
6.05%, 04/21/03 550,000 559,515
6.94%, 05/19/05 125,000 133,443
7.37%, 08/01/06 1,500,000 1,591,020
------------
2,283,978
Federal Home Loan Bank: 8.0%
4.80%, 09/22/98 350,000 348,414
5.375%, 02/13/01 1,000,000 995,690
6.83%, 06/07/01 1,000,000 1,008,550
8.00%, 08/27/01 250,000 269,568
------------
2,622,222
</TABLE>
34
<PAGE> 36
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS U.S. GOVERNMENT INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- ----------- --------- ------------
<S> <C> <C> <C>
FEDERAL AGENCIES (CONTINUED)
Federal Home Loan Mortgage Corp.: 17.7%
7.00%, 07/15/99 650,978 $ 654,291
7.36%, 06/05/07 1,500,000 1,587,315
7.00%, 07/01/07 142,828 146,353
7.00%, 09/01/10 340,364 347,488
6.50%, 04/11/11 1,560,823 1,573,497
6.00%, 05/11/11 1,509,270 1,497,467
------------
5,806,411
Federal National Mortgage Assn.: 10.5%
6.16%, 04/03/01 1,000,000 1,017,990
6.00%, 11/01/03 102,153 102,631
8.63%, 06/30/04 150,000 172,752
6.50%, 03/01/09 215,866 217,751
7.00%, 04/01/11 1,573,394 1,604,861
8.00%, 09/01/25 341,319 354,436
------------
3,470,421
Other Federal Agencies: 5.4%
Government National Mortgage Assn, 7.50%, 01/15/26 1,367,786 1,409,668
Small Business Administration, 6.90%, 08/25/08 259,851 264,229
Student Loan Marketing Assn., 7.50%, 03/08/00 100,000 104,049
------------
1,777,946
TOTAL FEDERAL AGENCIES
(COST $15,495,274) 15,960,978
------------
TOTAL INVESTMENTS
(COST $ 32,138,726) 100.0% 32,884,908
Other assets less liabilities 1,995,010
------------
NET ASSETS $ 34,879,918
============
</TABLE>
The accompanying notes are an integral part of these statements.
35
<PAGE> 37
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998
NOTE A -- ORGANIZATION OF THE TRUST AND SIGNIFICANT ACCOUNTING POLICIES
Security First Trust (the Trust) was established under Massachusetts law
pursuant to a Declaration of Trust dated February 13, 1987, as an unincorporated
business trust, a form of organization that is commonly called a Massachusetts
Business Trust. The Trust is registered with the Securities and Exchange
Commission as a diversified open-end management investment company (mutual fund)
under the Investment Company Act of 1940 (1940 Act).
On June 17, 1987, the shareowners of Security First Legal Reserve Fund, Inc. and
Security First Variable Life Fund, Inc. (the Funds), each of which was a
Maryland corporation registered as an investment company under the 1940 Act,
approved Plans of Reorganization and Liquidation and on July 24, 1987, the Funds
became Series of the Trust and their shareowners became shareowners of the Bond
and the T. Rowe Price Growth and Income Series (the Growth and Income Series),
respectively, in a tax-free exchange of shares. The Trust operates as a "series
company," as that term is used in Rule 18f-2 under the 1940 Act. Financial
information for periods prior to June 17, 1987, reflect the results of the
respective funds.
The Declaration of Trust permits the Trustees to issue an unlimited number of
shares and to divide such shares into an unlimited number of series, all without
shareowner approval. Pursuant to this authority, the Board of Trustees of
Security First Trust established the Value Equity Series and the U.S. Government
Income Series on January 11, 1993, which commenced operations May 19, 1993.
On February 27, 1997 the Board of Trustees unanimously approved the name change
of the T. Rowe Price Bond Series to the Bond Series.
The following is a summary of significant accounting policies followed by the
Trust:
FEDERAL INCOME TAXES -- Each series of the Trust has elected to qualify as a
"Regulated Investment Company." No provision for federal income taxes is
necessary because each series intends to maintain its qualification as a
"Regulated Investment Company" under the Internal Revenue Code and distribute
each year substantially all of its net income and realized capital gains to its
shareowners. Income and gains to be distributed are determined as of December
31, because the Trust reports for tax purposes on a calendar year.
PORTFOLIO VALUATION -- Investments are carried at market value. The market value
of equity securities is determined as follows: Securities traded on a national
securities exchange are valued at the last sale price; securities not traded on
a national securities exchange are valued at the bid price for such securities
as reported by security dealers. Fixed maturities are valued at prices obtained
from a major dealer in bonds.
36
<PAGE> 38
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE A -- ORGANIZATION OF THE TRUST AND SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Short-term investments which have remaining maturities of more than 60 days and
for which representative market quotations are readily available are valued at
the most recent bid price or yield equivalent as quoted by a major broker-dealer
in money market securities. Securities with remaining maturities of 60 days or
less are valued at their amortized cost, which approximates market value due to
the short duration to maturity. Securities and other assets for which such
procedures are deemed not to reflect fair value, or for which representative
quotes are not readily available, are valued at prices deemed best to reflect
their fair value as determined in good faith by or under supervision of officers
of the Trust in a manner specifically authorized by the Board of Directors and
applied on a consistent basis.
DIVIDENDS AND DISTRIBUTIONS -- Each series declares dividends annually. Net
realized gains from security transactions, if any, are distributed annually.
OTHER -- As is common in the industry, security transactions are accounted for
no later than the day following the date the securities are purchased or sold.
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily.
NOTE B -- REMUNERATION OF MANAGER AND OTHERS
Bond Series and T. Rowe Price Growth and Income Series:
The Manager, Security First Investment Management Corporation (Security
Management), is entitled by agreement to a monthly fee equal to 1/24 of 1% of
the average daily net asset value of the Bond Series and Growth and Income
Series (equivalent annually to .5%), less compensation payable to the Series'
investment advisers, Neuberger & Berman, LLC (Bond Series) and T. Rowe Price
Associates (Growth and Income Series). However, to the extent that operating
expenses (including management fees but excluding interest and taxes and certain
extraordinary expenses) of each series exceed 2.5% of the first $30 million of
each series' average daily net assets, 2.0% of the next $70 million of each
series' average daily net assets, and 1.5% of each series' average daily net
assets in excess of that amount, calculated on the basis of each series' fiscal
year (the expense limitation), the agreement requires that Security Management
waive its fee. In addition, for the year ended July 31, 1998, Security
Management has also agreed to reimburse the Bond Series for any remaining
expenses exceeding a limitation equivalent annually to 1.5%. Security Management
may elect on an annual basis to reimburse the Series for future excess expenses.
37
<PAGE> 39
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE B -- REMUNERATION OF MANAGER AND OTHERS (CONTINUED)
If during the fiscal year repayments are made to the Manager and the series'
expenses subsequently exceed the expense limitation, the Series shall recover
such repayments from the Manager to the extent of the excess determined.
Conversely, if during the fiscal year repayments are made by the Manager and the
series' expenses subsequently are within the expense limitation, the Manager
shall recover such repayments to the extent of the excess repaid. It is
management's opinion that it is reasonably possible that actual operating
expense may be less than the expense limitation; however, in accordance with the
requirements of FASB Statement No. 5, no accrual has been made for the
contingent obligation to repay Security Management for excess expense
reimbursements since the conditions required for such accrual have not, in the
opinion of management, been met.
T. Rowe Price Associates provides investment advice and makes investment
decisions for the Growth and Income Series, while Neuberger & Berman, LLC
provides the same for the Bond Series. T. Rowe Price Associates and Neuberger &
Berman, LLC are each paid an annual fee of .35% of the average daily net assets
of the series for which they respectively provide investment advice less any
compensation payable to Security Management acting as adviser on certain assets
in which a series may invest.
Virtus Equity Series and Virtus U.S. Government Income Series:
The Manager, Security Management, is entitled by agreement to a monthly fee
equal to 1/13 of 1% (equivalent annually to .9%) of the average daily net asset
value of the Virtus Equity Series (the Equity Series) and Virtus U.S. Government
Income Series (the U.S. Government Income Series), less compensation payable to
the Series' investment adviser, Virtus Capital Management (Virtus). However, to
the extent that operating expenses (including management fees but excluding
interest and taxes and certain extraordinary expenses) of each series exceed
2.5% of the first $30 million of each series' average daily net assets, 2.0% of
the next $70 million of each series' average daily net assets and 1.5% of each
series' average daily net assets in excess of that amount, calculated on the
basis of each series' fiscal year (the expense limitation), the agreement
requires that Security Management and Virtus waive their fees. While they are
not obligated to do so, Security Management and Virtus have agreed to continue,
until notice to the contrary, to defer their fees (and make contributions in
respect of excess expenses) in order to maintain the expense ratios of the
Equity Series and the U.S. Government Income Series at a level of 1.00% and .70%
respectively, or less.
Virtus provides investment advice and makes investment decisions for the Equity
Series and the U.S. Government Income Series. Virtus is paid an annual fee of
.75% of the average daily net assets of the two series.
38
<PAGE> 40
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE C -- INVESTMENT SECURITIES TRANSACTIONS
Purchases and sales of fixed maturities and equity securities for the period
ended January 31, 1998 were as follows:
<TABLE>
T. Rowe Price
Growth U.S.
and Virtus Government
Income Equity Income
Bond Series Series Series Series
------------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
U.S. Government Securities:
Purchases $ 5,351,989 $12,580,672
Sales 5,989,581 5,026,991
Other Investment Securities:
Purchases 3,314,485 $ 45,341,331 $ 21,361,152
Sales 468,543 7,526,211 13,729,447
</TABLE>
Net realized gain or loss on sale of investments is determined by the specific
identification method and would not have been significantly different using the
average cost method. The cost of investments at January 31, 1998 was the same
for both financial statement and federal income tax purposes. At January 31,
1998, the composition of unrealized appreciation and depreciation of investment
securities was as follows:
<TABLE>
<CAPTION>
Unrealized
---------------------------
Appreciation Depreciation Net
------------ ------------ -----------
<S> <C> <C> <C>
Bond Series $ 473,503 $ 17,154 $ 456,349
T. Rowe Price Growth and Income Series 71,675,824 6,174,867 65,500,957
Virtus Equity Series 9,575,637 771,231 8,804,406
Virtus U.S. Government Income Series 747,737 1,555 746,182
</TABLE>
39
<PAGE> 41
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE D -- CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of the Trust were as follows:
<TABLE>
<CAPTION>
Shares Issued
in Connection
with Reinvestment of
----------------------------
Net Net
Investment Realized
Income Gain
Sold Distributions Distributions Redeemed Net
--------- ------------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C>
SIX MONTHS ENDED JANUARY 31, 1998
Bond Series 784,449 164,017 (222,763) 725,703
T. Rowe Price Growth and Income Series 2,066,590 270,050 866,173 (158,927) 3,043,886
Virtus Equity Series 740,444 63,241 535,647 (291,823) 1,047,509
Virtus U.S. Government Income Series 1,085,288 286,579 (208,661) 1,163,206
YEAR ENDED JULY 31, 1997
Bond Series 697,683 153,044 (519,644) 331,083
T. Rowe Price Growth and Income Series 3,217,205 223,202 410,369 (561,799) 3,288,977
Virtus Equity Series 2,258,599 68,155 279,366 (209,066) 2,397,054
Virtus U.S. Government Income Series 2,512,098 151,669 (166,573) 2,497,194
</TABLE>
40
<PAGE> 42
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE E -- FINANCIAL HIGHLIGHTS
The per share information for each respective series' capital stock outstanding
throughout the period is as follows:
<TABLE>
<CAPTION>
NET REALIZED TOTAL
AND INCOME DISTRIBUTIONS
NET ASSET UNREALIZED (LOSSES) DIVIDENDS FROM NET ASSET
VALUE AT NET GAINS FROM FROM NET REALIZED VALUE AT
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT INVESTMENT CAPITAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS PERIOD RETURN(2)
--------- ---------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BOND SERIES
Year ended July 31,
1993 $ 3.95 $ .22 $ .14 $ .36 $ (.23) $ 4.08 9.11%
1994 4.08 .21 (.25) (.04) (.22) 3.82 (0.98)
1995 3.82 .24 .08 .32 (.22) 3.92 8.38
1996 3.92 .24 (.04) .20 (.24) 3.88 5.10
1997 3.88 .24 .14 .38 (.24) 4.02 9.79
Six months ended
January 31, 1998 4.02 .09 0.11 .20 (.21) 4.01 4.97
T. ROWE PRICE
GROWTH AND INCOME SERIES
Year ended July 31,
1993 $ 8.32 $ .22 $ .49 $ .71 $ (.22) $ 8.81 8.53%
1994 8.81 .23 .44 .67 (.22) 9.26 7.60
1995 9.26 .29 1.35 1.64 (.26) $ (.06) 10.58 17.71
1996 10.58 .30 1.56 1.86 (.30) (.04) 12.10 17.58
1997 12.10 .30 4.69 4.99 (.29) (.54) 16.26 41.24
Six months ended
January 31, 1998 16.26 .14 .23 .37 (.30) (.95) 15.38 2.28
VIRTUS EQUITY SERIES
May 19, 1993
through July 31,
1993 (3) $ 5.00 $ .01 $ (.01) $ .00 $ .00 $ 5.00 0.00%
Year ended July 31,
1994 5.00 .05 (.03) .02 (.03) 4.99 0.40
1995 4.99 .05 .71 .76 (.05) 5.70 15.23
1996 5.70 .10 .46 .56 (.05) $ (.16) 6.05 9.82
1997 6.05 .09 2.60 2.69 (.11) (.45) 8.18 44.46
Six months ended
January 31, 1998 8.18 .04 0.17 0.21 (.08) (.64) 7.67 2.57
VIRTUS
U.S. GOVERNMENT
INCOME SERIES
May 19, 1993 through
July 31, 1993 (3) $ 5.00 $ .03 $ .04 $ .07 $ .00 $ 5.07 7.10%
Year ended July 31,
1994 5.07 .11 (.19) (.08) (.07) $ (.01) 4.91 (1.58)
1995 4.91 .21 .15 .36 (.14) 5.13 7.33
1996 5.13 .18 .04 .22 (.19) (.01) 5.15 4.29
1997 5.15 .23 .20 .43 (.22) 5.36 8.35
Six months ended
January 31, 1998 5.36 .12 .08 .20 (.24) 5.32 3.73
</TABLE>
(1) Annualized
(2) Total return computed after deduction of all series expenses, but before
deduction of actuarial risk charges and other fees of the variable annuity
account.
(3) The Virtus Equity Series and U.S. Government Income Series commenced
operations on May 19, 1993.
41
<PAGE> 43
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
Ratio of
Ratio of Net
Operating Investment
Expenses Income Portfolio Net Assets
to Average to Average Turnover End of
Net Assets Net Assets Rate Period
----------- ---------- --------- -------------
<S> <C> <C> <C> <C>
BOND SERIES
Year ended July 31,
1993 1.45% 6.02% 36% $ 7,229,959
1994 1.30 5.45 58 7,225,964
1995 1.29 6.27 56 7,977,781
1996 .90 6.32 34 8,981,365
1997 .75 6.41 54 10,634,720
Six months ended
January 31, 1998 .70 5.94 60 13,528,502
T. ROWE PRICE
GROWTH AND INCOME SERIES
Year ended July 31,
1993 .75% 2.77% 5% $ 55,160,198
1994 .78 2.62 11 65,660,970
1995 .74 3.10 8 83,789,646
1996 .64 2.73 8 112,552,893
1997 .57 2.44 14 204,703,098
Six months ended
January 31, 1998 .58 2.02 4 240,495,102
VIRTUS EQUITY SERIES
May 19, 1993 through
July 31, 1993(2) 1.00%(1) .85%(1) 7% $ 1,333,852
Year Ended July 31, 1994 1.00 1.38 121 3,007,073
Year Ended July 31, 1995 1.00 1.29 84 7,765,719
Year ended July 31, 1996 1.00 2.24 88 20,701,776
Year ended July 31, 1997 1.00 1.56 55 47,571,469
Six months ended
January 31, 1998 1.00 .94 28 52,655,583
VIRTUS
U.S. GOVERNMENT INCOME SERIES
May 19, 1993 through
July 31, 1993(2) .70%(1) 3.91%(1) 0% $ 469,060
Year ended July 31, 1994 .70 3.62 17 3,424,487
Year ended July 31, 1995 .70 5.19 16 5,996,149
Year ended July 31, 1996 .70 5.38 148 14,888,824
Year ended July 31, 1997 .70 5.68 62 28,889,460
Six Months ended
January 31, 1998 .70 5.64 17 34,879,918
</TABLE>
(1) Annualized
(2) The Virtus Equity Series and U.S. Government Income Series commenced
operations on May 19, 1993.
42
<PAGE> 44
VARIABLE ANNUITIES OFFER
CHOICES AND BENEFITS THAT
REGULAR MUTUAL FUNDS CAN'T
Tax-deferred retirement savings plans are among the best investments a
person can make today for his or her future. As a vehicle for creating
tax-favored retirement savings, variable annuities offer many advantages.
A variable annuity offers the opportunity to invest in a diversified
portfolio of securities similar to mutual funds. Taxes are deferred on all
dividends and on all increases in portfolio value until you take your money out.
At retirement, another significant advantage is that the variable annuity
can provide you with income that is based on the performance of the fund or
funds in which you participated. You may elect to receive monthly, quarterly or
annual payments for a specified number of years, your lifetime, or the longer of
your lifetime and the lifetime of your joint payee. See your policy for specific
options available to you.
The Security First Trust series offers you a choice of professionally
managed options. You may invest in a Bond Series, Growth and Income Series,
Equity Series, or U.S. Government Income Series, each with a varying degree of
risk:
SECURITY FIRST TRUST BOND SERIES is for conservative investors. The
objective is to achieve the highest investment income over the long term
consistent with the preservation of capital.
SECURITY FIRST TRUST T. ROWE PRICE GROWTH AND INCOME SERIES is for
individuals willing to accept a degree of risk. The fund's goal is growth of
principal with a reasonable level of income primarily through investment in
common stocks.
SECURITY FIRST TRUST VIRTUS EQUITY SERIES also seeks to provide growth of
capital and income through investment in common stocks of high quality
companies. The fund is for individuals willing to accept a degree of risk.
SECURITY FIRST TRUST VIRTUS U.S. GOVERNMENT INCOME SERIES is for
conservative investors and seeks to provide current income through investment in
a diversified portfolio limited primarily to U.S. government securities.
[LOGO]
11365 West Olympic Boulevard
Los Angeles, California 90064
(310) 312-6100
SEMI-ANNUAL REPORT
JANUARY 31, 1998
SECURITY
FIRST
TRUST
BOARD OF TRUSTEES
Jack R. Borsting Howard H. Kayton
Katherine L. Hensley Lawrence E. Marcus
Security First Trust Bond Series
Security First Trust T. Rowe Price Growth and Income Series
Security First Trust Virtus Equity Series
Security First Trust Virtus U.S. Government Income Series
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